With the housing market saturated, and the mortgage market choking on Obama’s newest legislation, more Americans are renting than ever before.

Millions of good, honest families with less than stellar credit are learning the hard way that they will be renting just a bit longer than originally planned, and re-entering the rental home market after a long-term lease involves opening yourself up to a whole new breed of con artist.

The Rent To Own trap:

Primarily a simple marketing scam, this one is more an irritating con than actual criminal activity, with affiliate links at the heart of the ploy…In a nutshell, they trick you into paying them without ever delivering the promised product.

The “carrot on a stick” they dangle is a listing of local homes that you can rent on a lease option deal, commonly known as “Rent to Own”. While lease options do exist, and are a great way to grab your next rented home, you won’t get any help in finding one from these scammers.

In general terms, a lease option works like this:

You agree to a lease of 2 years (for example), and pay a slightly inflated monthly rent, with a portion of said rent going into an escrow account to be used as your down payment. The extra money buys you the ‘option’ of purchasing the home at lease end.

You will have the length of your lease to arrange financing in order to purchase the home when the lease expires. In that time, it is assumed that you can improve your credit score to the point that a traditional lender will approve the loan.

Lease options are a Win-Win deal; The seller is moving houses while most others suffer the pains of a flooded market, and the buyer not only locks-in a buy price on a home that could be worth much more in 2 years, he also gets to feel personally vested in a home that traditional lenders would have denied him.

– Now back to the con artists…

Craigslist is a great place to find local rentals, and most are legit. Phone numbers are a big plus, as are pictures and an address.

Along with the rental ads are far too many ALL CAPS ads (first red flag) stating “FREE LIST OF LOCAL RENT TO OWN HOMES”, and a picture of a beautitul home they hope will funnel leads into their net. ( It’s just Fishing 101: The better the bait, the more meat in the freezer.) You click the link of course, because you want that free list of RTO homes.

The first landing is a gimmicky website peppered with pictures of beautiful homes (that “Could be yours!”), a few well-below market rent numbers, and a fake image of a very trust-worthy website owner (or investor, lawyer, etc…it varies), because people tend to trust faces over words.

Even if you skip the type and go straight for the exit, the result is always the same. The exit from this mini-site (one of many that rotate to stay ahead of the authorities) is the “Get Your Free list Now!” button, which won’t work until they capture your name, email, and phone (for part 2 of this con, I’ll get to that in a bit). This takes you to the first affiliate link: One of the “Free Credit Score” scam sites. As they explain, this is required by the investors who are “waiting in line to sell you a beautiful RTO home!”.

Sign up for the “free trial”, and the marketer just made from $1-4, depending on the site. Once you have your score, you are hustled into the next phase of the con (again, by the “Get Your Free Listing Now!” button): A subscription service that sells listings of foreclosed homes for a monthly fee. Another affiliate link, and the marketer just made a couple more dollars…without actually owning or delivering a product.

Now, to be fair; These listings of foreclosed homes do occasionally include an RTO or two…but bear in mind that these are Nationwide listings, and you can easily buy a list that has zero homes in your area.

As for part 2 of the con…Remember putting your name, address, email, and phone on the first form? That data was automatically added to his ‘suckers list’ that he will sell to other marketers, and you will very soon be flooded with offers of anything real estate-related, from credit repair services to local townhouses.

1: Every realtor can get you a list of properties for free, and most will send daily updates to your email…spam not included.

2: Do a Google search for “real estate investors in (your state)” and “buy my house” as a first step to locating investors who are flipping houses through RTO deals. I’ve been on both ends of RTOs, and it’s hard to beat. You lock in a price, but you’re not bound to buy (remember the word “option”?). If after the lease expires you change your mind, you simply walk away; No harm, no foul.

— — — — — — — — —

The “Out of Town Owner” Trap:

This is actually an old scam that has found a new and easier way to operate, thanks mostly to Craigslist.

Basically: A scammer (in Spain, for example) browses the Sale ads on a realtor’s site like Long & Foster, and locates a few very nice houses that are languishing on the market without much attention (listed at least 6 months works best).

He/she swipes the images and brief description, and posts these same houses on Craigslist as “Property For Rent”, usually with a rental amount about $100-200 below average for the size/area. Email is the only contact offered (red flag).

You of course run out to look at this amazing deal, and are blown away by the amount of home you could get for the offered price…and fire off an email stating your urgent desire to lock in this deal.

Within a few days your reply arrives, and to your delight the home is still available! There’s just one catch… She is a missionary (ambassador, soldier,etc), currently working in Spain while her beautiful home sits empty back in the States.

While she is truly and deeply sorry that she can’t meet you in person for a walk-through, she is fully willing to trust in your kindness by releasing the keys to the property to you upon receipt of your first month’s rent plus security deposit. Her mother (sister,etc.), who lives a few hours away is holding the keys, but they won’t make the trip every weekend just to show the house.

Red flag #2: Your personal check won’t do her any good in Spain, so it has to be an International Money Order or Western Union.

Now, I don’t personally know of anyone who has fallen for such an ill-conceived and transparent scam, but it seems safe to assume that maybe it does occasionally work because it simply won’t go away…in a week of browsing the local CL ads, I came across 3 of them.

1: When making your initial ‘driveby list’, ads without phone numbers should be on the last page, if they get listed at all.

2: Never pay anyone for a rental property that you can’t view with an owner / manager with keys. (Climbing through a window is a red flag.)

– That last bit was humor of course, but is based on the original form of this scam which I first saw in Baltimore many years ago. The con would locate a home that was for sale by an out of state seller, and simply climb through a window and start showing the home as a rental, accepting cash only for the deposits. As Dumb as it sounds, it worked.